2015 (9) TMI 1253 - Board - Companies Law

Rectification in the Register of Members - period of limitation to challenge the genuineness of transfer of shares - The Share Certificates of the Company were issued in the name of the Trustees/Original Members, namely, the Petitioner, the Respondent No. 2, Mr. Shrikrishna Narhari Inamdar (SNI) and Mr. Dilip Ganesh Karnik (DGK) on behalf of the Trust. Held that - The Law of Limitation is founded on public policy. Its aim being to secure the quiet of community, to suppress fraud and perjury, to quicken diligence, and to prevent oppression. Its object is to give effect to the maxim, interest re-publicoe out sit finis littum-the interest of the state requires that there should be limit to litigation and to prevent disturbance or deprivation of what may have been acquired in equity and justice by long enjoyment or what may have been lost by a party s own inaction, negligence or laches. The object of the statutes of limitations is to compel a person to exercise his right of action within a reasonable time as also to discourage and suppress stale, fake or fraudulent claims. Keeping in view the aforesaid object and reason as to application of limitation, if it is held that the provisions of the Limitation Act do not apply in the relation to petition filed under Section 111(4) of the Act, in that case, it would imply that an aggrieved party may approach to the CLB even after several years. This cannot be a true intent of the law. As stated above, as a matter of a policy, the purpose of the limitation prescribed in law is to restrict the litigation on the ground of limitation so that the parties can approach the court of law within a reasonable time. Only in the cases, where there is a continuous wrong, the law of limitation become irrelevant. In the present case, there is a definite date of cause of action and, therefore, it is expected that an aggrieved party should approach the court within the prescribed period of time with effect from the date of knowledge/cause of action. The next question then arises as to what is the prescribed period in the instant case. - Held that - I have already held that the Petitioner had knowledge of having signed the documents with respect to the impugned transfer of share. I am, therefore, not inclined to accept that the Petitioner came to know for the first time in 2011 with respect to the impugned transfer of shares. These documents were admittedly executed in the year 2007. Therefore, the period of limitation of 3 years would start from the date, on which these documents were signed. Undisputedly, the petition came to be filed after expiry of 3 years. I, therefore, hold that the petition is barred by limitation and, therefore, deserves to be dismissed on this ground. Assuming for the sake of arguments, that the provision of the Limitation Act, do not apply to the petition filed under Section 111(4) of the Act, it Is amply clear from the facts and circumstances of this case, that the petition suffers from acute delay and laches. Time and again, it has been held that if a petition suffers from unexplained delay and laches, the petition may be dismissed on this ground also. This point is answered accordingly. Whether the transaction if void ab intio - Held that - the petitioner has not approached the CLB with clean hands and, therefore, she is not entitled to the reliefs sought for and the petition deserves to be dismissed Decided against the petitioner.

Issues Involved:
1. Locus Standi of the Petitioner.
2. Doctrine of Estoppel, Waiver, and Acquiescence.
3. Non-Joinder of Necessary Parties.
4. Adjudication of Complicated Questions of Facts and Law.
5. Suppression of Material Facts and Documents.
6. Applicability of Limitation Act.

Detailed Analysis:

1. Locus Standi of the Petitioner:
The petitioner, one of the trustees of N.S. Trust, claimed rectification in the Register of Members of the company. The respondents argued that the petitioner had resigned as a trustee and relinquished her rights in the trust, thus lacking locus standi. The court held that the petitioner, being a co-trustee and joint shareholder, is a "person aggrieved" under Section 111(4) of the Companies Act, 1956, and has the locus standi to file the petition.

2. Doctrine of Estoppel, Waiver, and Acquiescence:
The respondents contended that the petitioner, by signing the share certificates and other documents, is estopped from challenging the transfer of shares. The court noted that compliance with Section 108 of the Companies Act is mandatory for valid transfer of shares. Since the petitioner did not execute any transfer forms, the doctrine of estoppel, waiver, and acquiescence does not apply. The court rejected this preliminary objection.

3. Non-Joinder of Necessary Parties:
The respondents argued that the petition is bad for non-joinder of necessary parties, specifically another trustee, Mr. Shrikrishna N. Inamdar. The court held that the petitioner filed the petition in her capacity as a joint shareholder, not as a trustee, and hence, the other trustees are not necessary parties. The objection was rejected.

4. Adjudication of Complicated Questions of Facts and Law:
The respondents claimed that the petition involves complicated questions of facts and law, which cannot be adjudicated under the summary jurisdiction of the CLB. The court found that the primary issue is the validity of the share transfer under Section 108, which does not involve complicated questions of facts and law. The objection was dismissed.

5. Suppression of Material Facts and Documents:
The respondents alleged that the petitioner suppressed material facts and documents, including her resignation and relinquishment documents. The court found that the petitioner did not disclose these documents deliberately and made false statements, thus not approaching the court with clean hands. The court held that the petitioner is not entitled to relief on this ground.

6. Applicability of Limitation Act:
The respondents argued that the petition is barred by limitation, as it was filed after the period prescribed under Article 137 of the Limitation Act. The court held that the CLB is a court for the purpose of the Limitation Act, and the petition, filed after three years from the date of knowledge, is barred by limitation. The court also noted that the petition suffers from delay and laches.

Conclusion:
The court dismissed the petition on the grounds of suppression of material facts, being barred by limitation, and delay and laches. The court also dismissed the applications for cross-examination of the petitioner. The interim orders were vacated, and no order as to costs was made.

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